Budget 2021: RM500 monthly withdrawal from EPF Account 1 for 12 months

• Update: Added EPF CEO's response.

BUDGET 2021 | The government will allow Employee Provident Fund (EPF) contributors to make withdrawals of RM500 per month from their Account 1.

This can be done for up to 12 months or RM6,000 in total.

Ahead of the announcement, calls were made for the government to allow a lump sum withdrawal of up to RM10,000, particularly to benefit lower-income groups.

Detractors of the proposal have pointed out that a large number of EPF contributors actually have less than RM10,000 in their Account 1.

Meanwhile, employee EPF contributions will also be reduced from 11 percent to 9 percent, effective January 2021.

In tabling Budget 2021, Finance Minister Tengku Zafrul Abdul Aziz also announced that EPF contributors can withdraw from their Account 2 to purchase insurance for life or critical care for themselves or their families.

These insurance schemes must be approved by EPF.

Meanwhile, tax relief of up to RM3,000 for private retirement schemes has also been extended to 2025.

Subsequently, EPF CEO Alizakri Alias said the decision to allow contributors to access Account 1 was a difficult one.

"It's not easy to make this decision and we didn't do it in haste. But we have found a middle ground to allow members to access their savings without affecting their retirement in the future," he said.

He said the criteria for the additional withdrawal are very specific and is only for contributors who are in dire need of financial aid.

"The convenience is for a short term and only given once in a lifetime to ease their financial burdens," he said.

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